Adventist Health System/West, dba Adventist Health, and its affiliated hospital White Memorial Medical Center have agreed to pay the United States and the state of California $14.1 million to settle claims that they violated the False Claims Act, the Justice Department announced today. Adventist Health is headquartered in Roseville, Calif., in the Eastern District of California, and operates 19 hospitals and over 150 clinics in California, Hawaii, Oregon and Washington. White Memorial Medical Center is a teaching hospital located in Los Angeles.
The settlement announced today resolves allegations that Adventist Health improperly compensated physicians who referred patients to the White Memorial facility by transferring assets, including medical and non-medical supplies and inventory, at less than fair market value. Additionally, Defendant White Memorial paid referring physicians compensation that the United States contended was above fair market value to provide teaching services at its family practice residency program. The United States alleged that these payments violated the Anti-Kickback Act and Stark Statute, and by extension, the False Claims Act. Approximately $11.5 million of the settlement will be paid to the U.S. Government, most of which will benefit the Medicare Trust Fund. The remaining $2.6 million will be paid to California’s Department of Health Care Services.
The Anti-Kickback Act prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and/or other federally-funded programs. The Stark Statute prohibits a hospital from submitting claims for patient referrals made by a physician with whom the hospital has an improper financial arrangement. Both the Anti-Kickback Act and Stark Statute are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
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